Following the big news related to the acquisition of Supercell, the Finnish mobile game giant, by the Chinese Tencent, which occurred June 23, and as we prepare to attend ChinaJoy, China’s largest game industry trade show, to support some of our clients, Influence Matters decided to provide some insight into the Chinese mobile game industry, describing the current status of this fast growing market, as well as possible future developments and opportunities. Our Head of Research (and intern) Lucrezia, had a look into the industry.
The deal between Supercell and Tencent, reported to be the biggest in the history of the gaming industry, mirrors the changes that have been reshaping the global mobile game market. As the 2015 Global Mobile Game Industry White Book reports, in between 2015 and 2016 the Chinese mobile game industry is supposed to overtake the American one in terms of revenue. Analysts foresee a Chinese mobile game industry revenue of $7.7 billion in 2016, up from $6.1 billion in 2015. The American one is set at $7.3 billion, up from $6.3 billion in 2015.
Data collected from Global Mobile Game Industry White Book 2015
The main factors of such a surreal growth are to be found in the increase of both mobile phones purchases and mobile communication services subscriptions in China. In the first half of 2014, mobile phone, especially smart phones, sales recorded an increase of 39percent in comparison to the first half of the previous year.
According to a report from Newzoo, China covers about 31 percent of the mobile games installed worldwide, which accounts for a total 4.2 billion games installs. Analysts predict that the flourishing of this industry will continue in China, reaching a total revenue of $13.9 billion in only three years-time. In terms of geographical distribution, the hungriest mobile games downloaders are concentrated on the Chinese Eastern coast and, more specifically, Guangdong, Jiangsu and Zhejiang have the biggest concentration on gamers in the whole China. It is also true that different cities require different apps. According to the report, Chinese from Guangdong are the biggest fans of mobile games, instead of Beijing, where the most downloaded apps are taxi related ones, and Shanghai, with a huge appetite for finance management apps.
As showed by the chart, RPGs, Strategy and card games are the most released genres in the PRC
In terms of operating system, the Chinese market is still dominated by local brands, such as Xiaomi. At the same time though, China is also the country with the highest number of games downloads from Android and iOS operating systems. Chinese gamers normally prefer iOS over Android, but just by a mere 1.3 percent.
Among the total of 16,500 games spread across several downloading platforms, the most popular in the Chinese market appear to be “card” and “role play” games. Up to February 2015, the former segment was ranking first in terms of number of available games, with 2,500 games already published, followed by “casual” and “role play” games, with respectively 2,042 and 1,407 games published. The trend is validated if we consider the genre of the most downloaded Android games, up to February 2015. On top of the list “Space Hunter”, an RPG by Yinhan, dominates the ranking.
Space Hunter, a mobile game developed by Yinhan
The report released February 6, 2016 by Niko, presents some more mobile game market predictions for the years to come. According to the report, despite the non-stop revenue growth that will characterize the Chinese mobile game industry, a number of major changes in the country might end up making the industry more complicated to approach, due to the high level of competitiveness. Difficulties to approach the market could be represented by the higher costs of Intellectual Property rights, which might lead game developers to produce more non-IP products. On the other hand, IP games are becoming more and more determinant, representing a trend that could soon attract international IP into the Chinese market.
Another disadvantage, especially for foreign developers interested in working with the Asian leader, is represented by exchange rate of the Chinese RMB to the US Dollar, which has experienced a major increase since the end of 2015. This trend could endanger foreign titles and IP, since they would become more expensive to buy in Mainland China. The measure could limit the penetration of foreign companies in the Chines market, but might also represent an opportunity for those who are willing to operate from inside the Chinese borders.
In addition, we will be witnessing a consolidation of small and mid-sized game companies, as a result of a crowded market that is becoming increasingly competitive.
A part from some grey market forecasts, there’s still a lot to look forward to from the Chinese market. We will list the three main trends that might give you some inspiration for your business development plans.
Virtual Reality games, appealing for Chinese gamers, will enter the market, together with products aimed at competing with Oculus and Sony, international VR leaders. At ChinaJoy 2016, a special section will be dedicated to VR games…and we will be there to further investigate new trends in the industry!
Other relevant occurrences to be looking for are the renewed welcoming of Google Play in China, which will mean boosted competition between Android and iOS, as well as new interest for cross-platform play from PC to mobile, including a trans-media entertainment approach.
Hoping to have been useful and of some inspiration to you. Keep following us for further news and tech industry analysis.
Lucrezia Dal Pra
From July 27 to July 31, Influence Matters will be at ChinaJoy 2016. Don’t miss this opportunity to get to know us, and discuss how we could help make you part of the conversation around the shift of powers in the gaming industry in China. Email simon@inmatt.com to set up a meeting.
